The total imported value of condoms in China reached USD 220.85 million, up by 65.8% YOY, from January to November, 2017. According to CRI’s analysis on data from China Customs, major sources of imported condoms in China were Taiwan, Malaysia, Thailand and Japan. The demand for quality condoms grows with the development of the economy and the improvement of livelihood. Although China is the largest condom producer and exporter, it lacks famous domestic brands, which result in the low-end market positioning of domestic condoms. According to CRI, the export volume was around twice the import volume while the export value was only about one third of the import value, and the average export price was only one sixth of the import price, from January to November, 2017.
In China’s condom market, global domestic brands such as Durex, Jissbon and Okamoto are well-known for their brand awareness and market shares. There are more than 20 large domestic condom manufacturers (whose annual output capacity is over 100 million pieces) in China, but with low market shares. Some domestic condom manufacturers with high capacity and output (whose annual output can even reach 1 billion pieces) capture small market shares with their self-owned brands. They mainly focus on OEMs, exporting only a part of products to the international market. In 2017,condoms were exported primarily to Hong Kong, South Africa, Russia and Pakistan, etc.
According to CRI, there were more than 800 million sexually-active people in China by 2017, but the utility rate of condoms was less than 50%. The main reasons include the fact that people stay away from discussing contraception in most areas of China. In addition, abortions are common with no restrictions in China. Therefore, many people consider that unwanted pregnancies can be solved through abortion so condoms are unnecessary. There are more than 300 million floating population in China, most of whom are low-income male adults. More than half of them are sexually active. Such a huge floating population has resulted in the prevalence of unprotected sex trade, which has led to the spread of sexually transmitted diseases. It is reported that in order to prevent the spread of sexually transmitted diseases such as AIDS, the Chinese government tries to place condoms in the most conspicuous places where sex workers can be found. The Chinese government can hardly promote the use of condoms because of various reasons. For example, severe restrictions on the advertising of condoms through traditional media such as newspapers and television stations cause that condom brands can only be advertised through the Internet. As the lifestyle of Chinese residents changes, the number of audience of newspapers and television stations is decreasing while the number of netizens is rising. In particular, the rapid development of e-commerce has led more and more consumers to buy condoms online. On the one hand, they can buy condoms with more favorable prices; on the other hand, they can avoid the embarrassment caused by the purchase in supermarkets, pharmacies and other places.
Prior to May 2005, condoms were administered as medical instruments by CFDA in China. Permits were needed for operating related products. However, the regulation was abolished after May 2005. The Chinese government had a long-term strict one-child policy before 2015. Thus, local governments in China had procured condoms for a long time and distributed them free of charge to people at the child-bearing age. However, free condoms distributed by governments were not popular due to the low purchase price and generally poor quality. Therefore, the procurement volume from governments in China was also declining. According to CRI, in 2017, the consumption of condoms in the domestic market exceeded 10 billion pieces, of which over 1 billion condoms was distributed by governments free of charge, the rest was available in the market at market prices. With the rapid development of e-commerce in China, some enterprises have launched online condom brands in order to reduce the marketing cost.
According to the Article 18 of the new Birth Control law which came into effect on Jan 1,2016, the government advocated that a couple have two children. So some media practitioners believed that China’s condom industry would suffer a massive blow. However, according to CRI, the new policy had little impact on China’s condom industry. The main reasons are: (1) China owns a large number of multi-child families (3 or more children), who are not target users of condoms because of low income.(2) in urban areas of China, most of families have no willing to raise a second child for high child-rearing costs;(3) at present, the utility rate of condoms in China is only about 50%, so there still is large room for growth. Condom use is a safe contraception, compared with contraceptives, abortions, etc.
According to CRI, major M & A and restructurings occurred in China’s condom industry in 2017 were as follows: On May 26, 2017, Humanwell Healthcare Co., Ltd. announced to spend a total of USD 600 million together with CITIC Capital to acquire a global sexual health business from Ansell’s two subsidiaries including Jissbon. On December 22, 2017, DAHU AQUACULTURE CO., LTD. announced that it planned to acquire 51% stake of Tibet Shenwan Tou Co., Ltd. with CNY 1.04 billion. Prime assets of Tibet Shenwan Tou Co., Ltd. are OKAMOTO CHINA, which is China’s exclusive agent of Okamoto condoms.
According to CRI, the market scale of China’s condoms is expected to keep growing, from 2018 to 2022, and the import and export value will also increase. Besides, China’s condom industry is expected to continue its M&A and restructurings. It is not ruled out that some excellent Internet condom brands may seek overseas IPO.